Eviction bill could stop condo, co-op owners from booting tenants

Legislation’s sponsor says they would be exempt, but some lawyers disagree

Feb.February 26, 2020 03:30 PM
From left: Alvin Schein, Julia Salazar, and Marjery Weinstein

From left: Alvin Schein, Julia Salazar, and Margery Weinstein

The re-emergence of the good cause eviction bill this month already had New York landlords worried. But now some real estate attorneys are sounding the alarm on what they call a major threat to condo and co-op owners.

The bill, which would limit when a landlord can evict a tenant from a market-rate apartment, does not explicitly exempt condo and co-op units. Seiden & Schein’s Alvin Schein said this will effectively “wipe out” these type of rentals because owners and condo and co-op boards do not want to risk being stuck with “permanent tenants.”

He noted that the measure would also deter prospective condo buyers.

“Developers who are selling their condos now would be in serious trouble because the value of their assets would drop” if the bill became law, Schein said.

In a letter to clients, Stuart Saft, who heads Holland & Knight’s real estate group, similarly warned that the bill would “seriously damage the economic viability of residential real estate including co-operatives, condominiums and hotels.”

As of last month, 5.4 percent of rentals in Manhattan were co-ops and 17.3 percent were condos, according to data provided by appraiser Jonathan Miller. In Brooklyn, co-ops made up 3.1 percent of rentals and condos 23.3 percent. For northwest Queens, co-ops were 2.8 percent of rentals and condos were 9.7 percent.

Sen. Julia Salazar, the bill’s sponsor, said owners of condos are not affected by the bill because “every unit is by definition individually owned and occupied by the owners” and co-ops are collectively owned.

She also pointed to language in the bill that excludes instances where a “sublessor seeks in good faith to recover possession of such housing accommodation for his or her own personal use and occupancy.”

But attorneys point to another section of the bill that limits owners’ reclaiming an apartment to units subleased in buildings with fewer than 12 units. And even in these smaller buildings, the exclusions don’t apply to condo and co-op owners because they aren’t technically sublessors.

“There is no carve-out unless the bill says there’s a carve-out,” said Margery Weinstein, a partner at Ganfer Shore Leeds & Zauderer who focuses on condo and co-op deals.

She and Schein also said they fear the bill could be interpreted to cap annual increases in maintenance charges paid by co-op owners and common charges paid by condo owners at 3 percent.

Good cause eviction was not included in the rent-stabilization law that passed last June but a bill was reintroduced in Albany this year. Earlier this month it was amended to allow for a rent increase of 3 percent or 150 percent of the Consumer Price Index, whichever is higher — up from just 150 percent of CPI in its original form. Increases beyond this, under the measure, are considered “unreasonable” and not grounds for eviction if a tenant is unable to pay them.

Since the passage of the Housing Stability and Tenant Protection Act of 2019, state officials have explored potential tweaks. Late last year, Queens legislators proposed a bill to ensure that its provisions do not apply to proprietary leases, which buyers sign after acquiring shares in a co-op building.

Write to Kathryn Brenzel at [email protected]

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